Filing Taxes as a Pastor

Pastors have a unique tax situation, because you don't have to have Social Security taxes deducted from your wages, which means for tax purposes you can be both an employee, and self employed.

Consult with a qualified tax professional to make sure that you receive all the deductions that you are entitled to.

Tax Forms

Self-employed pastors such as traveling evangelists, who make at least $600 in compensation per year, will receive a Form 1099-MISC at tax time, and should use Form 1040 Schedule C, to report wages and any business expenses.

A pastor who is an employee should use Form 1040 to itemize deductions, and fees he receives from church members for baptisms, weddings, and funerals should be reported on Form 1040, Schedule C.

Housing Allowance

You may be able to exclude some or all of your income from a church, or an employer related to the church, as a church designated housing allowance from income you receive for federal income tax purposes.

For example, if you have a housing allowance of 30%, and you have a $60,000 salary, your housing allowance would be $18,000. If you can exclude the full 30%, you will not have to report the $18,000 on your federal income tax form, but you need to report it as income on Form 1040, Schedule SE, as part of your self-employment tax liability.

All income exclusions that you are claiming for income tax purposes should be documented. If the church gives you more money for a housing allowance than you can lawfully claim, the excess is reported as income on the tax return. Self employment tax must also be paid on the fair rental value of your home.

If you own your home, and are itemizing deductions, you can deduct both property taxes and mortgage interest on Form 1040, Schedule A, even though you could not exclude these items as part of your housing allowance.

Business Expenses

If you have business expenses such as stamps, paper, or office expenses that the church does not reimburse, you can deduct these expenses on your income tax under miscellaneous itemized deductions, and as part of self employment taxes. If your office is in your home, and you're receiving a housing allowance from the church, you can deduct your office expenses as part of self-employment taxes, but not on your1040 Form.

Other expenses related to your pastoral duties such as professional association dues, buying and maintaining pastoral robes, certain educational expenses, and any job-related expenses you incurred in your search for employment can be deducted.

If you have car expenses such as parking, toll charges, or gasoline, you may need to fill out Form 2106, and attach it to your1040 Form.